There’s a good case for Amazon to buy IFTTT: Data and a smarter platform

With the Amazon Echo Plus now available, Amazon finally has a hub of its own for the smart home. I’m still convinced the Echo Plus is really meant for folks that don’t already have a hub controlling devices in their house, mainly because Amazon opted not to include a Z-Wave radio in the hub. Folks who already have smart home hubs likely already have some Z-Wave products; my front door lock uses Z-Wave for example, as does the Go Control garage door sensor I recently purchased (stay tuned for the review on that).

Those of us with smart home hubs are also already likely familiar with IFTTT, the service that lets you easily create “recipes” for automating devices, communications and data. But folks who buy an Echo Plus as their first smart home hub probably haven’t heard of IFTTT. And that got me thinking: Perhaps Amazon buying IFTTT would be the perfect FIT, er…. fit.

Last I checked, much of IFTTT back end already runs on Amazon Web Services, so there wouldn’t be a large technical effort or change if such a deal were to happen. Here’s a diagram from the IFTTT engineering team back in 2015 illustrating all of the moving parts.

The thing is, Amazon today doesn’t get any of the data out of IFTTT’s AWS usage. At least not that I can tell from reading the AWS Data Privacy site, which says,”Customers maintain ownership of their customer content and select which AWS services process, store and host their customer content. We do not access or use customer content for any purpose other than as legally required and for maintaining the AWS services and providing them to our customers and their end users. We never use customer content or derive information from it for marketing or advertising.”

So any potential deal would provide Amazon ownership of the IFTTT data that’s flowing to connected devices, services, and notifications. That helps Amazon understand which “things” its customers are connecting.This could provide opportunities for Amazon to sell hardware or products that can assist with its customer’s home automation goals. Do we, as customers of IFTTT necessarily want that? Obviously, that’s debatable but for now I’m removing my “consumer” hat to think about this scenario.

And if I’m really doing that, I’m going to with a thought that the consumer me really doesn’t like, but here it goes: With a purchase of IFTTT, Amazon could make the service exclusive to its own devices. Again, that’s not something I’d want to hear as an IFTTT user but let’s think about it from Amazon’s standpoint.

This exclusivity could be the true third pillar of Amazon’s Echo plans as a platform, the first being Alexa Voice Services and the second being Alexa Skills. With a simple-for-the-masses tool to create unique automations, Amazon would have a powerful smart home ecosystem for both developers and everyday consumers. And that could be a huge advantage compared to Amazon’s rivals.

Would it be feasible for Amazon to purchase IFTTT from a financial standpoint? Absolutely. IFTTT has raised $33.8 million to date, and if the investors wanted a 10x return, as an example, it would only cost Amazon $338 million for the purchase. Amazon ended its last financial quarter with $12.8 billion in cash and cash equivalents, so the investment wouldn’t be held back by the balance sheet.

I’m betting someone buys IFTTT at some point, although the company could always go public before that happens. Regardless, Amazon would be well served to grab IFTTT before a competitor does, helping to keep building up on the momentum Amazon has in our smart homes.